News & Commentary

The crisis in Cyprus is finally getting the attention it's due, says Brian Battle of Performance Trust Capital Partners, because of the unprecedented nature of the bailout terms, and because investors don't want to be left exposed before an "unknowable weekend in Europe."

Stocks finished in negative territory Friday, with the Dow snapping a 10-day win streak and the S&P 500 ending shy of its record closing level, following a disappointing consumer sentiment report and as investors started to question whether the recent rally has run out of steam. "We're near the all-time high and you'd have to start betting on a mean reversion," said Brian Battle, vice president of trading at Performance Trust Capital Partners.

This March — Thursday, to be more precise — bank executives invited me to their office to tell me they planned to combine Vista Bank Texas and CommunityBank of Texas. But this time, richer shareholders weren’t going to ride off into the sunset just yet — it’s expected to be a merger of equals, allowing “everyone to maintain their position” in the bank. In other words, there's no premium. “Frankly, I think there should be more of these (types of deals), but typically egos get in the way,” said Dan Bass, Houston managing director of Performance Trust Capital Partners. “One side or another wants control or wants a premium.” But who knows, Bass said — the deal could spur similar transactions “where they put their egos in check and say, look, this makes a lot of sense. Merger and acquisition multiples aren’t going to get back anytime soon to what we were used to. But if we get to $2 billion, and they do come back, our shareholders are going to benefit from that.”

Vista Bank Texas and CommunityBank of Texas have agreed to a merger of equals, creating a $2.3 billion-asset financial institution in coveted, high-growth Houston, executives told the Houston Business Journal on Thursday. The merger would create one of the largest privately owned community banks in the Houston area, making it a tempting acquisition target for out-of-state banks or positioning it to make an initial public offering in future years — it would certainly allow the bank to compete harder against larger local financial entities, said Dan Bass, Houston managing director of Performance Trust Capital Partners. “I think what this tells you is this is not a group of shareholders that is done with banking, packing it in and leaving the industry — this is truly a long-term play of putting two banks together,” Bass said.

Two Houston banks scored "satisfactory" marks on the Federal Deposit Insurance Corp.’s exam on compliance with the Community Reinvesment Act, which purports to measure how well banks serve various segments of the population. But it’s not too difficult — it’s a standard, pre-Dodd Frank compliance test that banks have gone through for several years, said Dan Bass, Houston managing director of Performance Trust Capital Partners LLC. The banks “know the rules as far as what they need to be doing to show that they’re serving all areas of the community, not just the high-net-worth areas,” Bass told me in a quick phone call early Tuesday, adding that the test takes into account a population’s mix of income and geography. “Basically, you define your market share and show that you’re not discriminating against one type of client base.”

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